Yes, prisons are full of people who shouldn’t be there. But where would Ken Clarke put them?

On the face of it, the recent row between former Home Secretary Michael Howard and Justice Secretary Kenneth Clarke over plans to reduce the prison population is a straight choice between Mr Clarke’s pragmatic wish to trim the budget and the ‘prison works’ philosophy of Mr Howard.

Yet both men are overlooking a vital element in the debate and a realistic solution that would save hundreds of millions of pounds from the Home Office budget while making sure our worst criminals stay behind bars.

The stark truth is that a significant proportion of prisoners in our jails should not be there at all.

These unhappy men and women are not criminals in the ordinary sense, but sufferers from mental illness.

Instead of being subjected to the hugely expensive process of criminal justice and imprisonment – a process likely to make their condition worse – they should receive medical treatment for mental illness in hospitals or secure care homes.

No one knows this better than those at the sharp end – the fellow prisoners of mentally disturbed inmates and the prison staff who have to deal with them in difficult and sometimes dangerous situations.

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I spent a few days of my seven months as a prisoner in the hospital wing of HMP Elmley in Kent.

It was almost the worst period of my sentence. Screams from the disturbed occupants of the neighbouring cells at night were one problem. Another was the behavioural abnormalities of about 15 inmates collectively known as ‘The Fraggles’ (from the TV series Fraggle Rock).

One of these sad characters, with a rolling-eyed twitch in his face, addressed me aggressively on my first morning over breakfast.

‘I know who you are! You’re General Custer. I know what you did to those Cree Indians,’ he shouted. He kept this up for four days, incessantly giving deranged military salutes to ‘General, sir’ (i.e. me).

I met another troubled character in the showers. His body was criss-crossed by angry red scars. ‘I can see you’re looking at me mars,’ he grunted (that’s slang for scars).

‘Can’t really miss them, can I?’ I replied.

‘No, yer can’t,’ he said in an affable tone, ‘but don’t worry, I don’t do violent. I done ’em on meself. But I’m all right when I take me pills.’

As I got to know the mars man better, he told me he was a schizophrenic who had been in and out of prison for years.

Different views on the prison system: Former Home Secretary Michael Howard (left) and current Justice Secretary Kenneth Clarke

His main trouble seemed to be a tendency to imagine he was cured, then to throw away his pills, and then to lurch into shoplifting, looting or any other crime that entered his head.

If it was true, he should have been in a secure home rather than a prison.

Unfortunately, there is an abundance of such stories from throughout the criminal justice system. Official statistics on the mental health problems inside our prisons are patchy and out of date.

But recent figures from the Sainsbury Mental Health Centre say that 6,900 prisoners (eight per cent of the jail population) suffer from the most severe disorders of schizophrenia and psychosis.

In total, 17,500 prisoners have been diagnosed with mental health disorders – between 12 and 20 times higher, as a proportion, than in the population as a whole.

Women’s jails are a particularly distressing example of these troubles. They hold less than five per cent of the prison population yet account for nearly half of the self-harm incidents.

London’s Holloway prison alone averages five reportable self-harm cases a day. Many are gruesome, involving repeated ligaturing, cutting of wrists and other areas, and the swallowing of toxic objects.

Prison staff who bear the day-to-day brunt of these dramas deserve great credit for coping with the continuing crises of the mentally ill.

Time after time officers arrive just in time to bandage wounds, hit panic buttons, halt the self-mutilations and save lives.

Inevitably there are times when they arrive too late. There were 72 prison suicides last year.

Figures from the Sainsbury Mental Health Centre say that 6,900
prisoners (eight per cent of the jail population) suffer from the most
severe disorders of schizophrenia and psychosis

The root cause of many of these tragic problems was well summarised in a report by the outgoing HM Inspector of Prisons Dame Anne Owers: ‘Prison has become, to far too large an extent, the default setting for those with a wide range of mental and emotional disorders.’

What, then, is to be done?

There are useful recommendations gathering dust in reports from Baroness Corston, Lord Bradley and three from Iain Duncan Smith’s Centre for Social Justice, one of which I chaired.

In the long term Mr Duncan Smith, now Secretary of State for Work and Pensions, is the most hopeful source of inspiration and reform. For IDS is the champion of early intervention.

This is Whitehall-speak for tackling the problem at the earliest opportunity – ideally during a deprived and disturbed childhood, but certainly before a court has sent a mentally-ill offender into a prison that will make his or her condition worse.Interventions should be popular with the Treasury.

A recent Sainsbury Mental Health Centre report claimed the Government could save £700million a year – in unnecessary trial and imprisonment costs – if it spent £10million on interventions to improve the process of diverting offenders with mental health problems from jail and into the mental health system.

But there’s a snag if the diversion merely means offenders get paper-shuffled to the Care in the Community rota. That system has all too often resulted in mentally disturbed people being left to wander around their local communities looking lost, ill and unsupervised.

The failures of Care in the Community have been well publicised, particularly on the rare occasions they have led to violence and even death.

But the concerns would grow into an outcry if it emerged serious criminals were being added to the system.

The Victorian solution was to build a vast system of mental hospitals, many of which survived until the Eighties. They removed troubled people from society, often by simply locking them away and forgetting about them. For that reason there will be little support for such a solution today.

But the nub of the problem is the wide gap between the handful of high security prison service establishments for the mentally ill, such as Broadmoor, and a low security form of care for mentally disturbed offenders outside the confines of jail.

In the Centre for Social Justice report, Locked Up Potential, which I chaired, we argued in favour of piloting a scheme we called Community Supervised Homes for Offenders (CSHOs).

As an early initiative in David Cameron’s Big Society, one or two CSHOs for women offenders could open in North London. Instead of being incarcerated in HMP Holloway, a trial number of mentally disturbed offenders could be diverted to the CSHOs.

There they could receive proper medical treatment while being quite strictly supervised under low-security conditions.

But they could also have better contact with their families, get help from voluntary and community groups and work in the community on day release.

The bill to the State would be much less than the £1,000 a week it costs to keep each woman in Holloway.

These interventions could be approved and monitored by one of the ‘mental health courts’ launched last year.

Like the new ‘drugs courts’, also launched last year, they are a beacon of experimental light.

They offer judicial review into our unsatisfactory criminal justice system – particularly the rehabilitation of drug addicts and mentally ill offenders, which desperately need an overhaul.

Let’s hope such interventions will form part of the agenda for the Government’s ‘rehabilitation revolution’.